Alamo Inc. had $270 million in taxable income for the current year. Alamo also had a decrease in deferred tax assets of $31 million and an increase in deferred tax liabilities of $56 million. The company is subject to a tax rate of 25%. The total income tax expense for the year was:

Alamo Inc. had $270 million in taxable income for the current year. Alamo also had a decrease in deferred tax assets of $31 million and an increase in deferred tax liabilities of $56 million. The company is subject to a tax rate of 25%. The total income tax expense for the year was:

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42nd Edition

ISBN:9780357161548

Author:Raabe

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Chapter14: Taxes On The Financial Statements

Section: Chapter Questions

Problem 24CE

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Definition Definition Estimated future tax made while preparing accounts. Deferred tax is estimated based on past and present transactions from financial statements. It is not the actual tax that needs to be paid or is refundable from the revenue authority; it is an accounting entry. It is necessary to account for deferred tax due to difference between accounting profits and taxable profits.

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